The Kiwi has managed to extend its recent gains after a Hammer candlestick signaled the return of the bulls. Yet within the context of a pronounced downtrend a close above the 0.8400 hurdle would be required to signal the potential for a more sustained recovery for the pair.

As noted in yesterday’s report a Morning Star formation on the four hour chart offered an early indication of a potential recovery for the Kiwi. An absence of key reversal patterns casts some doubt on an intraday correction for the pair. Yet, at the same time sellers sitting at the 0.8400 handle may keep the currency capped.

NZD/USD: Morning Star Signaled Rise Of The Bulls

Four Hour Chart - Created Using FXCM Marketscope 2.0, Volume Indicator Available Here

By David de Ferranti, Currency Analyst, DailyFX

Follow David on Twitter: @Davidde

To receive David’s analysis directly via email, please sign up here.

Learn how to read candlesticks to help identify trading opportunities with the DailyFX Candlesticks Video Course.